Tuesday, January 28, 2020

Trump Says the Fed Should Cut Interest Rates Even More

As the Federal Reserve monetary policy committee, the FOMC, meets today and tomorrow, President Trump put out a tweet this morning calling on the Federal Reserve to cut interest rates.

The Fed should get smart & lower the Rate to make our interest competitive with other Countries which pay much lower even though we are, by far, the high standard. We would then focus on paying off & refinancing debt! There is almost no inflation-this is the time (2 years late)!

The idea that the Fed can just lower interest rates without repercussions in the economy is just very shallow thinking. The more money the Fed prints, the more the capital-consumption structure is distorted leading to an eventual bust. See: Austrian School Business Cycle Theory

As far as price inflation, as I point out regularly in the EPJ Daily Alert, it is a myth to think price inflation isn't climbing. For this cycle, price inflation bottomed in January 2015. Now, it is threatening to break out with a major spike first to 3% then 5% that could happen at any time.